UK to plunge into Recession this year

The Organisation for Economic Cooperation and Development (OECD) believes the UK will fall into a recession this year.

They believe that the UK economy will shrink at an annual rate of 0.3% in the third quarter and by 0.4% in the final quarter. According to the latest official figures the UK economy did not grow at all in the second quarter.

For the economy to be declared as in a recession there has to be two quarters worth of negative growth and the gloomy outlook for the UK economy has pushed the Sterling to its lowest levels for two years against the euro.

Chancellor Alistair Darling said many leading economies were suffering from slowing growth and that the UK could “get through” a difficult period with the right policies in place.

The OECD sees the still unfolding downturn in the housing market as one of the major problems for western countries. To add to this the reduced amount of credit supply is not helping things. Although news today has suggested that the government may be considering reducing interest rates to try and encourage spending which will hopefully help turn the market around.